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THE 


GREAT   RAILWAY  CONFLICT. 


REMARKS 


OF 


JOHN  W.  GARRETT, 


PRESIDENT, 


MADE  ON  APRIL  14th,  1875, 


AT  THE 


ggik  ||Mlltl|  |ieliQi  qI  t|i  |iiiiri  ot  |IheIqii 


OP  THE 


BALTIMORE  AND  OHIO  R.  R.  CO. 


^ttUTTED  Sr  on7)EJi  OF  THE  "BOAST), 


BALTIMORE: 

THE    SUN    BOOK    AND   JOB    PRINTING    ESTABLISHMENT. 
1875. 


THE  GREAT  RAILWAY  CONFLICT. 


REMARKS 


OF 


JOHN  W.  GARRETT, 


PKKSIDENT, 


MADE  ON  APRIL  1,4Tfl[,;  J  $75, 


AT    THE 


j[e3ular  j|cintMi)  |[eetin0  of  tk  |  oard  of  mmim 


OF   THE 


BALTIMORE  AND  OHIO  K.  R.  CO. 


i^nij^TEj)  sr  onvEH  or  tub  isoa'RD, 


BALTIMORE: 

PRINTED  AT  THE    SUN  BOOK  AND  JOB  OFFICE. 
1876. 


^ 


THE 

GREAT  RAILWAY  CONFLICT. 


KEMARKS 

OF 

JOHN  ^W.    GARRETT, 

PRESIDENT, 

Made  on  April  14th,  1875,  at  the  Regular  Monthly  Meeting  of 
the  Board  of  Directors  of  the  Baltimore  and  Ohio  R.  R.  Co. 


Gentlemen: 

In  connection  with  the  declaration  of  the  usual  semi-annual 
cash  dividends  of  five  per  cent,  on  the  main  stem  and  on  the 
Washington  Branch  of  the  Baltimore  and  Ohio  Company,  I  con- 
gratulate you  upon  the  splendid  and  singularly  satisfactory  re- 
sults of  the  hostilities  waged  by  the  Pennsylvania  Railroad  Com- 
pany against  this  Company. 

We  have  the  returns  of  the  earnings  of  the  main  stem  and 
branches  for  the  month  of  March,  during  the  whole  of  which 
the  efforts  of  the  Pennsylvania  Company  to  injure  our  interests 
were  made  with  their  highest  ability,  and  the  result  shows  an  in- 
crease in  the  gross  earnings  of  the  Baltimore  and  Ohio  Com- 
pany, for  that  month  over  the  same  month  in  1874,  of  $103,- 
773.92. 

M179347 


*  Notwithstanding  the  largely-diminished  charge  for  passengers, 
the  results  show  an  increase  of  revenue  upon  the  main  stem, 
from  this  source,  of  45  per  cent. 

The  earnings  of  the  Chicago  Division  are  also  shown  to  be 
$100,624.81,  being  an  increase  of  more  than  50  per  cent,  upon 
the  revenue  of  the  preceding  month. 

The  developments  of  this  controversy  have  proven  to  be  of 
the  highest  importance  not  only  to  railway  companies  generally, 
but  to  the  leading  interests  of  the  country,  and  the  gravity  of 
the  subject  makes  proper  a  further  sketch  of  its  origin  and 
history. 

It  is  well  known  that  the  refusal  of  the  Baltimore  and  Ohio 
Company  to  enter  into  the  Saratoga  agreement  on  the  occasion 
of  the  visit  of  Presidents  Vanderbilt,  Jewett  and  Scott  to  Balti- 
more, in  November  last,  was  very  unsatisfactory  to  those  gentle- 
men and  the  companies  which  they  represented. 

In  reply  to  the  arguments  used  on  that  occasion  to  induce 
this  Company  to  become  a  member  of  that  combination,  your 
President  stated  that,  in  declining  to  join  their  combination,  he 
believed  he  was  serving  not  only  the  best  interests  of  this  Com- 
pany, but  the  permanent  interests  of  the  New  York  Central,  the 
New  York  and  Erie,  and  Pennsylvania  Companies.  For  he 
stated  that  if  the  four  great  trunk  lines  should  join  in  that  organi- 
zation, with  the  power  which  they  could  exercise  over  connect- 
ing lines,  it  would  be  regarded  by  the  people  as  a  combination 
against  their  interests,  and  that,  as  a  result,  there  would  be  a 
combination  of  the  people  against  the  railways  of  the  country, 
and  that,  through  the  courts,  which  are  the  exponents  of  the 
conscience  and  interests  of  the  public,  and  through  the  repre- 
sentatives of  the  people,  in  legislatures  and  in  Congress,  hostile 
action  would  be  induced  which  would  more  than  counterbalance 
the  advantages  that  would  flow  from  the  increased  rates  which 


could  be  commanded  through  so  powerful  an  organization.  The 
able  President  of  the  New  York  Central  road  responded  that 
there  was  much  force  in  this  view. 

Whilst,  however,  declining  to  become  a  member  of  that  com- 
bination, your  representative  urged  the  viciousness  of  fast  freight 
lines,  expressed  his  conviction  that  they  were  vampires  upon  the 
railway  system,  and  that  their  irregular  and  fraudulent  action 
would  interfere  with  the  maintenance  of  reasonable  and  proper 
understandings  in  reference  to  freight  rates.  He  also  cordially 
agreed  to  the  abolition  of  commissions  on  freight  and  passen- 
gers, and  to  discarding  middle  men  generally,  believing  that  the 
public  should  have  the  lowest  rates  that  railway  companies  could 
properly  work  for,  and  that  there  should  be  no  parties  interven- 
ing between  the  railways  and  the  public. 

For  a  short  time  subsequent  to  that  conference  the  general 
views  thus  agreed  upon  were  carried  out,  but  it  soon  became  ap- 
parent to  the  officers  of  the  Baltimore  and  Ohio  Company  that 
the  fast  freight  lines  were  violating  the  agreement,  and  that  the 
Baltimore  and  Ohio  Company  was  suffering  largely  in  its  busi- 
ness from  this  cause,  especially  in  all  the  Eastern  cities.  The 
Baltimore  and  Ohio  Company  was  ultimately  compelled  to  pro- 
tect itself  against  these  infractions  of  the  agreement  in  order  to 
maintain  its  business ;  and  it  demonstrated  the  accuracy  of  its 
statements  in  regard  to  those  infractions.  It  also  continued  to 
maintain  its  right  to  fix  the  rates  for  transportation  between  its 
Eastern  and  Western  termini.  Its  determination  to  establish  the 
rate  from  Chicago  to  Baltimore  at  35  cents  per  one  hundred 
pounds  proved  a  subject  of  great  dissatisfaction  to  the  Northern 
lines,  and  ultimately  led  to  a  decrease  of  the  rates  between  Chi- 
cago and  Eastern  cities  much  below  those  which  had  been  required 
by  the  three  Northern  lines  during  preceding  winters. 


6 

Complaints  were  made  by  officers  of  the  Pennsylvania  road 
regarding  reduced  rates  from  Baltimore  by  this  Company,  and 
the  Baltimore  and  Ohio  Company  demonstrated  that  the  fast 
freight  lines  of  the  Pennsylvania  road  had  been  guilty  of  break- 
ing down  those  rates  through  their  previous  actions. 

As  an  illustration  of  the  views  of  the  Pennsylvania  Company 
as  to  what  it  styled  "a  violation  of  the  agreement,"  I  submit  the 
following  correspondence  between  Mr.  A.  J.  Cassatt,  Third  Vice 
President  of  the  Pennsylvania  Railroad  Company,  and  Mr.  John 
King,  Jr.,  Vice-President  of  the  Baltimore  and  Ohio  Company, 
in  regard  to  the  tariff  on  petroleum,  viz : 

Philadelphia,  December  19th,  1874. 
John  King,  Jr.,  Esq.,  Vice  President  : 

My  Dear  Sir — In  our  conversation  yesterday,  I  omitted  to  say 
anything  in  reference  to  the  rates  at  which  you  are  carrying  oil 
from  Pittsburg  to  Baltimore.  It  is  generally  understood  that 
your  rate  is  eighty  cents  per  barrel,  a  cut  of  forty-eight  cents 
below  our  net  rate  to  Philadelphia. 

We  do  not  understand  that  petroleum  forms  any  exception  to 
the  agreement  between  our  companies  by  which  equal  rates  shall 
be  maintained  between  all  competing  points.  We  cannot,  there- 
fore, regard  your  present  rate  on  petroleum  otherwise  than  as  a 
violation  of  the  agreement,  and  must  ask  that  you  will  be  kind 
enough  to  give  this  matter  your  attention,  and  advise  us  of  your 
conclusions.  Yours,  very  truly, 

(Signed)  '  A.  J.  Cassatt. 


Baltimore,  December  22d,  1874. 
A.  J.  Cassatt,  Esq.,  Third  Vice-President  Pennsylvania  Rail- 
road Company  : 

My  Dear  Sir — I  beg  to  acknowledge  the  receipt  of  your  favor 
of  the  19th  inst.,  and  to  state  in  reply  that  we  cannot  admit  that 
we  are  '^cutting  rates"  on  coal  oil  from  Pittsburg  to  Baltimore. 

When  the  advance  on  coal  oil  rates  was  made  from  the  oil  re- 
gions and  Pittsburg  to  New  York,  Philadelphia  and  Baltimore, 
we  were  not  consulted.  Had  we  been,  we  should  have  expressed 
ithe  views  we  now  hold,  viz  :  That  there  is  nothing  in  the  situa- 
tion of  the  coal  oil  trade  to  cause  this  advance  in  the  rates  of 
transportation.  Doubtless,  the  Northern  lines  had  what  they  re- 
garded good  reasons  for  making  this  advance.  We  have  not 
•changed  our  rates;  but  the  Northern  trunk  lines,  acting  with  en- 
tire independence  of  us,  have  increased  theirs  to  suit  their  own 
views.  Surely,  when  there  was  nothing  agreed  to  by  the  Balti- 
more and  Ohio  Company  on  this  subject,  there  can  be  no  viola- 
tion of  an  agreement  on  its  part. 

Yours,  very  truly, 
(Signed)  JOHN  King,  Jr.,  Vice  President 

In  this  case  the  combined  roads  made  an  enormous  advance  in 
the  tariff  for  transportation  of  petroleum,  without  notice  to  the 
Baltimore  and  Ohio  Company,  and  without  reference  to  its  wishes 
•or  judgment,  and  then  claimed  that  the  Baltimore  and  Ohio 
Company  acted  improperly,  when  it  simply  continued  its  tariff^ 
which  had  been  in  force  for  more  than  two  years  past  without 
alteration. 

It  is  true  that  the  maintenance  of  moderate  rates  on  petroleum, 
when  the  parties  to  the  Saratoga  agreement  had  made  a  prodi- 
gious advance,  produced  very  marked  results  on  the  trade  of 
Baltimore.     The  statistics  show  that  the  exports  of  refined  oil 


from  Baltimore    from   January   ist  to  March  29th,  1875,  were 
5,025,505  gallons,  and  that  the  exports  of  refined  oil  from  Balti- 
more from  January   ist  to  March   29th,  1874,  were  but  340,722 
gallons,    and    that  the  gain,    therefore,    was    4,684,783    gallons* 
Was  it  not  the  vast  increase  of  this  business  in  Baltimore,  caused 
by  the  moderate  and  judicious  action  of  the  Baltimore  and  Ohio 
Company  in  regard  to  this  tariff,  which  aroused  the  criticism  of  the 
Pennsylvania  Company  ?  This  case  illustrates  largely  the  tone  and 
character  and  reasonablerit^ssbf -the  criticism  and  hostile  action 
of  the  Pennsylvania  road  towards- the  Baltimore  and  Ohio  Com- 
pany.    But  the  Baltimore  and  Ohio  Company,  with  its  admirable 
equipment,  its  superior  roads,  and  its  effective  lines  to  the  great 
centres  of  trade  in  the  Southwest  and  the  West  and  the  North- 
west, in  commanding  simply  that  to  which  it  was  fairly  entitled 
from  its  enterprise,  became  more  and  more  an  object  of  jealous 
hostility  on  the  part  of  its  competitors.      Palpably  they  resolved 
that  it  must  be  controlled,  and  the  history  of  the  case  shows  that 
the  distinguished  President  of  the  Pennsylvania  Railroad  Com- 
pany was  the  volunteer  who  undertook  to  control  and  reduce  to 
submission  the  Baltimore  and  Ohio  Company.    Like  Don  Quixote 
with  the  windmills,  with  his  single  spear  he  determined  to  control 
or  demolish  the  Baltimore  and  Ohio  Company !   His  absolute  con- 
fidence in  achieving  the  proposed  victory,  evidently  induced  the 
representatives  of  the  New  York  Central  and  the  New  York  and 
Erie  Companies  to  give  him  all  the  power  and  scope  he  asked; 
and,    gentlemen,  what    has    been    the  consequence?     Is   it  not 
known  to  all   that  the  chief  point  in  the  policy  of  the  Baltimore 
and   Ohio   Company  has  been   to  build   up  the   trade  of  Balti- 
more ?     And    this  champion  of  the   Saratoga   combination   has 
given  to  the  Baltimore  and   Ohio  road,  by  his  course,  the  most 
splendid  success  in  all   its  history,  in  enabling  it  to  accomplish 
with  so   much   greater   rapidity  its   grand  object!      To  punish 


9 

the  Baltimore  and  Ohio  Company,  what  course  did  he  adopt? 
He  reduced  the  rates  from  J^altimore  to  the  West  to  one-half- — 
and  in  some  cases  to  7iiuch  less  than  one-half — the  charges  from 
Philadelphia  and  New  York  and  Boston  to  the  same  cities;  and 
thus  he  made  the  Pennsylvania  Railroad  Company,  the  special 
representative  of  the  city  of  Philadelphia,  aid  directly  the  Bal- 
timore and  Ohio  Company  to  achieve  the  leading  object  of 
its  policy  with  a  success  that  has  attracted  the  attention  of  the 
whole  country!  He  has  given  to  the  opening  of  the  Chicago 
extension  of  the  Baltimore  and  Ohio  road  an  advertisement,  a 
significant  conspicuousness,  and  gained  for  it  a  power  and  pres- 
tige and  fame  for  unparalleled  usefulness  which  years  of  its  own 
efforts  could  not  have  effected  !  He  has  placed  before  the  nation 
the  fact  that  the  Baltimore  and  Ohio  Company  has  lines  so  com- 
manding in  their  influence  that  the  Pennsylvania  Company,  con- 
trolling, as  stated  in  the  report  of  its  investigating  committee,  5>933 
miles  of  railway,  representing  a  capital  of  $398,267,675.22,  has 
been  compelled  to  subordinate  itself  and  throw  its  whole  power 
into  building  up  the  city  of  Baltimore  at  the  expense  of  its  own 
city  of  Philadelphia  and  other  Eastern  cities  ! 

How  gratifying,  gentlemen,  to  see  around  you,  notwithstand- 
ing the  calamitous  depression  of  trade  in  other  cities,  the  activity,, 
vigor  and  extent  of  business  transacted  in  your  midst !  Our 
manufacturers  and  our  merchants  are  largely  prospering  under  the 
effects  of  what  was  designed  as  mere  hostility  to  the  Baltimore 
and  Ohio  Company.  And  the  Pennsylvania  Railroad  Company,, 
following  the  lead  of  our  Company,  has  made  its  passenger  rates 
so  low  to  Baltimore,  in  order  to  drive  the  Baltimore  and  Ohio 
Company  from  its  position,  that  large  numbers  of  business  men 
from  all  parts  of  the  country  are  coming  to  Baltimore  to  reap 
the  advantages  of  the  low  charges  both  for  travel  and  transporta- 
tion.    But  may  not  the  valiant  knight  have  so  entangled  his  lance 


10 

in  the  intricate  machinery  which  he  has  attacked,  that,  instead 
of  the  ''pulverization"  of  the  Baltimore  and  Ohio  Railroad  Com- 
pany, other  grave  and  large  interests  may  be  approaching  in  a 
terrible  manner  that  condition  ? 

Within  a  short  time  we  have  seen  the  announcement  that  the 
Pennsylvania  Company  has  ceased  to  pay  interest  on  the  enor- 
mous sum  of  more  than  fifteen  millions  of  dollars  of  bonds  of 
the  Columbus,  Chicago  and  Indiana  Central  Railroad  Company, 
and  it  is  also  notified  within  a  few  days  past,  that,  at  the  annual 
meeting  of  the  Pittsburg,  Cincinnati  and  St.  Louis  Railroad  Com- 
pany (its  important  Pan  Handle  route),  resolutions  were  unani- 
mously adopted  declaring  the  income  of  that  road  insufficient 
to  pay  the  interest  on  the  several  mortgage  bonds  due  ist  April, 
1875  ;  and  defaults  of  payment  of  interest  and  principal  by  this 
Company  also  are  alleged  to  have  taken  place  to  the  further  and 
alarming  extent  of  ten  millions  of  dollars  ! 

We  know  full  well  that  the  rates  fixed  by  the  Pennsylvania 
Railroad  Company  in  Baltimore  are  utterly  unremunerative  to 
that  road,  that  fifteen  cents  per  hundred  pounds  from  Balti- 
more to  Chicago — with  large  amounts  of  drayage  and  labor  paid 
in  many  cases — cannot  fail  to  produce  great  losses,  when  that  sum 
is  divided  between  the  Northern  Central,  the  Pennsylvania  and 
the  Pittsburg,  Fort  Wayne  and  Chicago  roads.  Such  rates  may 
produce  a  catastrophe  to  their  great  road  from  Pittsburg  to  Chi- 
cago, similar  to  that  which  has  already  fallen  upon  their  two 
great  and  leading  lines  to  which  reference  has  been  made, 
the  bonds  of  which  have  heretofore  been  held  and  regarded  as 
practically  guaranteed  by  the  Pennsylvania  Railroad  Company. 
We  must  confess,  gentlemen,  that  the  stock  and  debt  repre- 
senting the  capital  of  the  Baltimore  and  Ohio  Company  present 
figures  insignificant  when  compared  with  the  immense  pro- 
portions of  the  stock  and  indebtedness— without  reference  to  the 


11 

prodigious  aggregate  of  liabilities  guaranteed — of  the  Pennsyl- 
vania Railroad  Company.  Were  it  wealth  instead  of  debt,  the 
figure  representing  the  stock  and  indebtedness  of  that  Company 
would  be  magnificent  indeed.  Whilst  the  Baltimore  and  Ohio 
Company  has  $13,000,000  of  common  stock  and  $4,000,000  of 
six  per  cent,  preferred  stock,  the  Pennsylvania  Company  shows, 
of  stock  alone,  on  which  its  shareholders  expect  dividends  to  be 
continued,  $68,719,400.  The  New  York  Central  and  Hudson 
River  Railroads  represent  also  enormous  figures — more  than 
eighty-nine  millions  of  stock — and  the  New  York  and  Erie  Rail- 
road represents  over  eighty-six  millions  of  stock,  in  addition  to 
their  respective  mortgage  indebtedness. 

Parties  connected  with  the  Pennsylvania  road  cry  aloud 
against  the  alleged  ruin  brought  by  the  Baltimore  and  Ohio 
Company  on  the  railway  interests  of  the  country  ;  but,  gentle- 
men, it  is  the  Pennsylvania  Company  that  is  responsible  for  these 
low  prices.  It  established  these  unremunerative  rates  for  the 
purpose  of  driving  the  Baltimore  and  Ohio  Company  from  its 
policy  of  independence,  and  the  results  will  show  that  the 
famous  hero  of  La  Mancha  produced  as  much  effect  on  the  wind- 
mills as  President  Scott  will  produce  by  his  reckless  action 
upon  the  thoughtfully-considered  and  well-established  policy  of 
the  Baltimore  and  Ohio  Railroad  Company. 

Let  the  battle  go  on  !  Already  the  consumers  and  producers 
in  all  parts  of  the  United  States  have  had  their  attention  directed 
to  the  economies  of  the  port  of  Baltimore,  and  its  ample  sup- 
plies of  goods  of  every  description  at  the  lowest  prices ;  and  to 
the  fact  that  it  has  a  great  line  of  railway  absolutely  determined 
(as  it  has  comparatively  and  assuredly  the  power  to  do)  to  main- 
tain at  all  times  moderate  rates  for  the  transportation  of  imports 
and  exports  to  and  from  the  port  of  Baltimore.  This  determi- 
nation is  based  upon  wise  and  just  principles,  and  will  result  in 


12 

enforcing  its  policy,  which  will  make  the  entire  country  appre- 
ciate that  Baltimore  presents  another  great  and  economical  port 
on  the  Atlantic,  with  vast  and  increasing  advantages,  and  fur- 
nishes the  cheapest  and  best  entrepot  for  large  sections  of  the 
South  and  Southwest,  the  West  and  Northwest. 

The  only  apology  that  has  been  urged  by  the  Pennsylvania 
Railroad  Company  for  its  extraordinary  proceeding  in  refusing 
accommodations  upon  the  Camden  and  Amboy  line,  (which  it 
controls  as  a  monopoly  between  Philadelphia  and  New  York, 
and  on  which  its  charges  in  many  instances  are  double  what 
they  will'  be  when  an  effective  competing  line  is  established,) 
for  the  freight  and  passenger  business  of  the  Baltimore  and  Ohio 
road,  is  its  allegation  in  connection  with  the  use  of  the  Wash- 
ington Branch  prior  to  the  construction  of  the  Baltimore  and 
Potomac  road.  To  demonstrate  not  only  the  injustice,  but  the 
gross  misrepresentation  made  on  this  subject,  a  copy  is  submitted 
of  a  letter  written  when  these  misstatements  were  made  in  the 
Congress  of  the  United  States,  and  when  adverse  legislation  was 
urged  because  of  these  statements  made  then  in  the  interests  of 
the  Pennsylvania  Railroad  Company.  This  letter  was  addressed 
to  the  Hon.  Reverdy  Johnson,  then  a  Senator  from  Maryland, 
and  is  as  follows : 

"Baltimore,  29th  March,  1867. 

"My  Dear  Sir — I  am  obliged  for  your  esteemed  favor  of 
27th  instant. 

"Baggage  is  checked  at  our  Washington  station  for  Philadel- 
phia, New  York,  etc.,  and  for  all  points  in  the  West  by  our  main 
stem. 

"The  complaints  to  which  you  refer  are  doubtless  in  reference 
to  travel  via  Harrisburg  and  the  Pennsylvania  road,  as  by  all 
other  lines  the  arrangements  are  as  perfect  as  practicable. 


13 

"You  are  aware  that  the  Pennsylvania  Company  is  not  merely 
a  rival,  but  a  hostile  interest.  The  Baltimore  and  Ohio  Company 
can  furnish  no  through  checks  for  baggage  by  the  Northern  Cen- 
tral road,  which  is  controlled  by  the  Pennsylvania  road,  except 
arrangements  be  made  with  the  officers  of  the  latter  Company. 
This  Company  has  for  years  been  entirely  willing  to  make  the 
requisite  arrangements  to  check  baggage  through  from  Washing- 
ton to  all  points  desired  by  the  Northern  Central  and  Pennsyl- 
vania roads,  making  but  one  proviso,  which  is  usual  under 
similar  circumstances,  viz  :  That  if  tickets  are  sold  and  baggage 
be  checked  at  our  Washington  station,  the  Pennsylvania  road 
shall  cease  to  maintain  separate  and  antagonistic  offices  in 
Washington. 

"  This  reasonable  and  proper  arrangement  has  not  been 
accepted,  although  I  have  repeatedly  called  the  attention  of  the 
leading  directors  of  the  Northern  Central  road  to  its  necessity 
and  propriety. 

*T  fully  accord  that  the  public  should  be  accommodated  upon 
this  subject,  and  I  am  equally  satisfied  that  the  Northern  Central 
Company  would  cordially  cooperate,  if  not  adversely  controlled 
by  the  Pennsylvania  Company.  It  would,  of  course,  be  useless 
to  cause  this  Company  to  maintain  additional  rival  offices  and 
meet  the  needless  expensiveness  of  *the  present  system  in  Wash- 
ington, if  tickets  to  all  points,  by  either  road,  at  the  option  of  the 
passenger,  could  be  obtained  at  our  Washington  station. 

**As  the  fault  of  the  failure  to  effect  the  proper  arrangement 
lies  entirely  with  the  Pennsylvania  road,  I  will  be  obliged  if  you 
will  make  the  requisite  explanations  to  such  parties  as  are  inter- 
ested. 

'T  am,  with  great  regard, 

"Very  truly  yours, 

•'J.  W.  Garrett,  President. 
^'Hon.  Reverdy  Johnson,  U.  S.  S.,  Washington."  ^ 


14 

This  letter  was  read  by  Senator  Johnson  in  the  Senate,  pub- 
Hshed  at  the  time,  and  no  reply  whatever  made  by  the  Pennsyl- 
vania Company. 

The  impregnable  truth  and  accuracy  of  these  statements  pre- 
vented even  any  attempt  to  attack  them,  and  show  conclusively 
the  injustice  of  the  slanders  which  are  again  being  uttered  on 
this  subject. 

Perhaps  no  better  illustration  of  the  ability  of  the  Baltimore 
and  Ohio  Company  to  compete  with  the  Pennsylvania  Company 
need  be  shown  than  to  call  attention  to  their  much  vaunted  Balti- 
more and  Potomac  road.  This  enterprise,  which  has  only  a 
single  track  line — and  that  single  track  certainly  not  of  the  best 
character — in  connection  with  its  expenditures  on  part  of  the 
tunnel  in  the  city  of  Baltimore,  and  its  totally  unremunerative 
track  to  Pope's  Creek,  represents — as  officially  stated  by  the 
Stockholders'  Investigating  Committee — a  cost,  in  stock  and  debt 
of  nine  millions^  eight  himdred  and  eighty-eight  thousand^  seven 
hundred  and  thirty-six  dollars  !  !  The  Washington  Branch  of 
the  Baltimore  and  Ohio  Company,  which  the  learned  writers  in 
behalf  of  the  Pennsylvania  Company  (in  publications  apparently 
by  the  authority  of  that  Company)  criticize  as  an  "  unavailable 
asset,"  is  a  strictly  first-class,  double-tracked  road,  with  the  best 
steel  rails,  and  the  most  durable  masonry  and  bridges,  thirty-one 
miles  in  length  from  the  Viaduct  to  Washington,  and  is  repre- 
sented by  a  capital  of  one  million  six  htmdird  and  fifty  thousand 
dollars. 

Another  contrast  of  economy  of  working  seems  to  show  the 
ability  of  the  Baltimore  and  Ohio  Company  to  maintain  itself  in 
any  competition  which  the  Pennsylvania  Company  may  desire. 
President  Scott  states  that  his  charge  for  terminal  expenses,  viz  : 
for  the  deliveries  and  transfers  at  New  York,  by  putting  cars  on 
floats  between  Jersey  City  and  New  York,  oi  five  cents  per  hundred 


15 

pounds,  "is  not  sufficient  to  cover  the  actual  cost  of  the  work  done."" 
The  Baltimore  and  Ohio  Company  has  a  similar  transfer  performed 
in  the  same  manner  between  Locust  Point  and  Canton,  and  the 
actual  cost  of  this  transfer  is  less  than  the  half  of  one  cent  per 
hundted pounds.  Surely  there  must  be  strange  elements  in  this 
"  actual  cost  "  on  the  part  of  the  Pennsylvania  Railroad  to  make 
it  loom  up  into  such  an  extravagantly  comparative  figure. 

Every  artificial  obstruction  placed  in  the  way  of  traffic  from* 
the  Baltimore  and  Ohio  road  to  Philadelphia  and  New  York, 
serves  to  add  business  to  Baltimore,  and  daily  increases  the  great 
sympathy  and  support  of  the  West  and  the  South,  and  leads  to- 
sustaining  the  Baltimore  and  Ohio  road  and  the  City  of  Balti- 
more, for  the  clear  reason  that  bonds  of  mutual  interest  are  being 
thus  effectively  strengthened.  Obstruct  the  movements  of  pass-^ 
engers  and  freight  between  Baltimore  and  Philadelphia  and  Balti- 
more and  New  York,  and  those  very  passengers  stop  at  Balti- 
more, examine  its  advantages  as  a  market,  purchase  their  goods,, 
avail  of  the  low  freights  from  this  city,  and  become  its  custom- 
ers and  cordial  friends. 

An  epoch  has  been  reached  in  the  history  of  this  struggle,, 
and  the  varied  attacks  of  the  single  knight  have  proven  to  be 
disastrous  failures.  He  has  recently  been  reinforced  by  the  rep- 
resentatives of  the  New  Yovk  Central  and  the  New  York  and 
Erie  Companies ;  and  now  it  is  not  only  a  battle  of  one 
railway  company  against  another  railway  company,  but  it 
is  a  struggle  to  maintain  the  policy  of  the  Baltimore 
and  Ohio  Company  against  the  combined  power  of  the 
greatest  railways  on  the  continent,  representing  with  their  asso- 
ciate lines,  more  than  seven  hundred  millions  of  capital !  But 
the  very  fact  that  they  do  represent  $700,000,000  of  capital  will 
be  the  cause  of  the  failure  of  the  combined  attack,  and  the  very 
fact  that  the  Baltimore  and  Ohio  Company  represents  so  limited 


16 

a  capital,  with  such  grand  and  effective  lines  under  its   manage- 
ment, makes  victory  on  its  part  certain. 

This  is  not  the  first  great  struggle  in  which  the  Baltimore  and 
Ohio  Company  has  been  involved  with  these  lines.  At  the 
commencement  of  its  present  administration  efforts  were 
•made  to  enlarge  the  business  of  the  road,  and  rates  were  fixed 
from  Baltimore  lower  than  the  rates  from  Northern  cities  to  the 
Western  centres  of  commerce,  upon  the  plain  and  strong  grounds 
of  the  geographical  advantages  of  this  city.  Those  eminent  and 
able  railway  officers,  the  late  Erastus  Corning,  Dean  Richmond 
and  J.  Edgar  Thomson,  agreed  upon  a  programme  to  force  the 
Baltimore  and  Ohio  Company  to  charge  the  same  rates  from 
Baltimore  as  they  charged  from  New  York  and  Philadelphia. 
That  was  a  very  great  controversy.  The  President  of  the  Balti- 
more and  Ohio  Company  called  the  attention  of  the  officers  of 
the  New  York  Central  Railroad,  in  convention,  prior  to  the 
commencement  of  that  conflict,  to  the  fact  that  the  city  of  Balti- 
more was,  by  a  singular  coincidence,  exactly  the  distance  nearer 
to  Cincinnati  than  the  distance  from  New  York  to  Cincinnati,  of 
298  miles — the  entire  distance  between  Albany  and  Buffalo — 
and  that  they  demanded  that  the  Baltimore  and  Ohio  Company 
should  charge  for  its  distance,  thus  298  miles  shorter,  equal  to 
the  whole  length  of  their  line,  the  same  rate  for  transportation. 
Reckless  rates  were  then  made  by  that  hostile  combination 
against  the  Baltimore  and  Ohio  road.  But  what  was  the 
result  ?  A  loss  of  millions  to  those  lines  in  that  protracted 
■conflict,  and  the  ultimate  establishment  of  the  fact  that  common 
sense  and  the  laws  of  trade  must  govern  on  all  such  subjects,  and 
that  from  that  day  to  this  hour  no  serious  effort  has  been  made 
by  those  lines  to  force  that  principle  (at  that  period  pressed  .with 
so  much    pertinacity)  again  on    the  attention  of  this  Company. 


17 

Whether  this  conflict  continues  for  a  long  or  a  short  period, 
gentlemen,  I  judge  it  will  be  your  determination  that  the  policy 
of  preserving  the  independence  of  this  Company  shall  be  main- 
tained. As  your  executive,  I  deem  it  a  privilege  to  battle,  and,  if 
necessary,  to  make  sacrifices  for  the  great  object  in  view. 

Our  stockholders  are  largely  identified  with  the  interests  of 
Baltimore  and  with  the  interests  upon  our  lines.  The  massive 
business  pouring  over  our  roads  gives  employment  to  the  many 
thousands  in  our  service.  The  pay  of  our  employees,  in  the 
States  through  which  our  lines  pass,  is  distributed  among  the 
farmers,  the  tradesmen,  and  the  general  population.  We  aid 
progress  everywhere,  build  up  all  our  local  interests,  and  add  to 
the  prosperity  of  our  great,  growing  and  beautiful  city.  Are 
we  expected  to  decline  the  maintenance  of  our  views,  the  main- 
tenance of  fixed  policies,  based  on  sound  principles,  when  the 
worst  efforts  that  the  Pennsylvania  Company  can  make  against 
us  are  shown  to  be  that  they  are  compelled  to  aid  us  in  building 
up  the  city  of  Baltimore,  and  in  making  it  understood  in  every 
direction  throughout  the  country  that  Baltimore  presents  the 
greatest  advantages  and  inducements  for  commercial  transac- 
tions ? 

We  have  the  satisfaction  of  knowing  that  at  this  period,  invest- 
ors from  New  York,  Chicago  and  other  cities  are  purchasing  real 
estate  in  our  suburbs,  and  merchants  from  many  quarters  are 
arranging  to  transfer  their  homes  to  our  city ;  and  among  the 
gratifying  results  attendant  upon  these  railway  difficulties  are 
the  constant  and  increasing  prosperity  of  our  community. 

President  Scott  has  addressed  to  me  the  statement  that  he 
believes  the  railway  officers  and  the  stockholders  who  may  be 
injured  will  hold  the  President  of  the  Baltimore  and  Ohio  Rail- 
road responsible  for  this  "policy  of  destruction." 

What  is  this  "policy  of  destruction  ?"  The  reduction  of  rates 
in  Baltimore'  to  one-half  the  prices  charged  in  Philadelphia  and 


18 

New  York  to  Western  cities — and  this  policy  was  originated  by 
him  and  has  been  continued  by  him.  Other  difficulties  and  reduc- 
tions followed  from  this  cause.  "Facts  are  stubborn  things ;"  and 
the  judgments  of  men  are  governed  by  facts  and  not  by  erroneous 
assertions.  If  the  vast  railway  fabric  which,  legitimately  or  illegiti- 
mately, has  been  built  up  or  controlled  by  the  Pennsylvania  Rail- 
road Company,  shall  be  broken  down  by  the  folly  of  these  pro- 
ceedings, history  will  record  that  the  responsibility  for  the  failures 
to  pay  dividends  and  interest  on  the  stock  and  bonds  of  the  roads 
involved—  which  I  regret  to  anticipate  will  cause  the  ruin  and 
misery  of  thousands  of  helpless  and  innocent  investors  and  vic- 
tims—is with  President  Scott,  and  that  the  continuance  of  this 
state  of  things  rests  with  him  and  the  Directors  of  the  Penn- 
sylvania Railroad  Company,  and  that  no  part  ©f  that  responsi- 
bility, ruinous  as  the  results  may  prove  to  vast  interests,  will 
attach  to  the  managers  of  the  Baltimore  and  Ohio  Railroad 
Company. 

After  remarks  by  Messrs.  Banks,  Cheston  and  others,  sustain- 
ing the  policy  and  action  of  the  Company,  a  resolution  was 
unanimously  adopted  by  the  Board  of  Directors,  approving  of 
the  maintenance  of  the  policy  of  the  Company  by  President  Gar- 
rett, and  ordering  the  address  to  be  printed  in  pamphlet  form. 


YC  4 


3896 


ivil793'17 


THE  UNIVERSITY  OF  CALIFORNIA  UBRARY 


